Headnote:
Criminal Procedure Code,1973 – Section 103 and 165 - Customs Act, 1962 – Section 135(a) r/w 135(i),123,123(1) and 111 - Evidence Act – Section 114 - Raided premises - Recovered gold - Smuggled gold - Respondent was prosecuted in the Court of Presidency Magistrate, Bombay, for offences - Magistrate convicted him in respect of these offences and sentenced him to suffer six months rigorous imprisonment and to pay a fine - In consequence of certain information received by staff of Anti-Corruption Bureau, Bombay, residential premises of accused-respondent was searched - Respondent himself was not present at his house, but his wife and mother were present in premises at the time of the search - As a result of the search, Anti-Corruption Bureau recovered 100 gold bars, each weighing 10 tolas - These gold bars had foreign markings and were in the shape of gold biscuits of 24 carats purity and were found stitched in a cotton jacket, which was lying in a steel trunk underneath some clothes - Prevailing market value of recovered gold was sum - As the search was being completed and Panchanama prepared, Custom Authorities, also raided premises - Whether accused knew that gold in question was smuggled gold does not really arise – Held, High Court has held that those Rules do not apply because accused respondent had not acquired possession of these gold biscuits by purchase or otherwise within meaning of those Rules - Such a narrow construction of this expression, in court opinion, will emasculate these provisions and render them ineffective as a weapon for combating gold smuggling - As was pointed out by this Court in Balkrishna Chhaganlal v. State of West Bengal, AIR 1974 SC 120; Rule 126-P (2) - Undoubtedly, this long delay is a factor which should, along with the other circumstances, be taken into account in mitigation of the sentence - Even so, in a case of gold smuggling court are loath to accord to the accused, found guilty, benefit of the Probation of Offenders Act - Smuggling of gold not only affects public revenue and public economy but often escapes detection - For the foregoing reasons, we allow this appeal, set aside the acquittal 600 of accused and convict him under Sec. 135 (1) (a) & (b) - However, taking into account all the circumstances of the case, particularly the fact that these criminal proceedings, like the sword of Damocles have been hanging over the head of respondent for more than eleven years, court sentence him cumulatively on these two counts, to six months imprisonment and a fine and, in default, to suffer four months further imprisonment - Court further convict him under Rule 126-P (2) of Defence of India Rules, 1962 and sentence him to six months rigorous imprisonment - Sentence on all the counts shall run concurrently - Bail of the accused-respondent is cancelled - He must surrender to serve out the sentence inflicted on him - Appeal allowed.

Judgement Key Points

Key Points: - (!) (!) Section 135(1)(a) and (b) penalize persons knowingly concerned in evading duties or dealing with goods liable to confiscation; punishment scales depend on value and category. - (!) (!) For goods exceeding Rs. 1 lakh market value under Section 135(1)(a), imprisonment up to 7 years with fine; otherwise up to 3 years or with fine. - (!) (!) Prosecution can discharge burden by circumstantial evidence even if Section 123 is not attracted; mens rea can be inferred from surrounding circumstances (Issardas Daulat Ram and Labhchand cases cited). - (!) (!) (!) (!) Rule 126-H(2)(d) and Rule 126-P(2)(iv) of Defence of India Rules restrict purchase/acquisition of gold to licensed dealers or permitted circumstances. - (!) (!) High Court erred by narrowly constraining "acquires possession"; Court holds it has wide amplitude, including possession by a non-owner or non-purchaser to constitute offence under 135(1)(b). - (!) (!) Court imposes concurrent sentences including six months imprisonment and fines, and convicts under Rule 126-P(2); bail cancelled; proceeds with appeal allowed. - (!) Emphasizes that smuggling of gold affects public revenue; mischief-rule interpretation required to give effect to statute. - [p_20–p_22] References to US constitutional discussions; not central to Indian statutory interpretation but cited regarding balancing evidentiary rules. - (!) (!) Final outcome: appeal allowed; acquittal reversed; respondent convicted on all counts. - (!) - (!) Text of relevant Defence of India Rules provisions quoted for interpretation.

Question 1?

What is the scope of Section 135(1) of the Customs Act, 1962 and how it requires proving possession, keeping, or dealing with goods known or believed to be liable to confiscation?

Question 2?

What is the proper interpretation of Rule 126-H(2)(d) read with Rule 126-P(2) of the Defence of India Rules, 1962 regarding acquisition of gold and applicability to possession vs. ownership?

Question 3?

How does the court apply the Mischief Rule to interpret "acquires possession" in Section 135(1) to ensure effective suppression of gold smuggling, including circumstantial evidence standards when Section 123 is not applicable?

JUDGMENT

SARKARIA, J. :—This appeal by special leave is directed against a judgment, dated October 13, 1972, of the High Court of Bombay.

2. Netwarlal, respondent herein, was prosecuted in the Court of the Presidency Magistrate, 2nd Court, Mazgaon, Bombay, for offences, (1) under S. 135 (a) read with Section 135 (i) of the Customs Act, 1962, (2) under Section 135 (b) read with Section 135 (i) of the same Act, and (3) under Rule 126-H (2) (d) read with Rule 126-P (2) (iv) of the Defence of India Rules, 1962. The Magistrate convicted him in respect of these offences and sentenced him to suffer six months rigorous imprisonment and to pay a fine of Rs. 1,000 on each count. The material facts are as follows.

On March 6, 1968, in consequence of certain information received by the staff of the Anti-Corruption Bureau, Bombay, residential premises of the accused-respondent at Old Hanuman Lane, Bombay was searched at about 1 p.m. The respondent himself was not present at his house, but his wife and mother were present in the premises at the time of the search. As a result of the search, the Anti-Corruption Bureau recovered 100 gold bars, each weighing 10 tolas. These gold bars had foreign markings and were in the shape of gold biscuits of 24 carates purity and were found stitched in a cotton jacket, which was lying in a steel trunk underneath some clothes. The prevailing market value of the recovered gold was Rs. 1,85,000. As the search was being completed and the Panchanama prepared, the Custom Authorities, also raided the premises. The Anti-Corruption Bureau, however, first completed its Panchanama and later on a separate Panchanama was prepared, under which the gold so seized by the Anti-Corruption Bureau was taken possession of by the Customs Authorities. The case of the prosecution further was that the respondent remained absconding after this recovery till March 14, 1968, when he surrendered.

3-4. The Customs Authorities, also, took proceedings under the Customs Act, 1962, and during the course of those proceedings, recorded the statement of the accused respondent, his wife, and mother.

5. At the trial, the accused respondent denied the charge and claimed to be tried. He, however, did not dispute the fact that the gold in question was found from his premises. Substantially, his defence was that this gold was brought into his premises by one Jayantilal Salla (P.W. 4) and left there in his absence. The respondent further pleaded that he had no connection with this gold. He asserted that if at all anybody was responsible, it was Jayantilal Salla, who has been examined as prosecution witness in this case.

6. The learned Presidency Magistrate by his judgment, dated October 16, 1970, found that the charges had been established against the respondent. He rejected the defence story and convicted the respondent as aforesaid.

7. Aggrieved, the respondent preferred an appeal against his conviction to the High Court. The appeal was heard by a learned single Judge (Vimadalal, J.), who by his judgment, dated October 13, 1972, allowed the appeal, set aside the conviction of the respondent and acquitted him. Hence this appeal by the State of Maharashtra against that acquittal.

8. The High Court has held that the prosecution has failed to prove that the gold found in the house of the accused was gold on which duty had been evaded, or the import of which was prohibited and, in that view of the matter, the first and second charges framed against the accused must fail, and the further question as to whether the accused knew that the gold in question was smuggled gold does not really arise. The High Court refused to consider the decision of this Court in S. Banerjee v. S. Agarwal, (1966) 1 SCJ 111, which was relied upon by the counsel for the State, with the observation.

"Suffice it to say that the observations in the majority judgment of Wanchoo, J. in the said case would apply only if it was in the first instance proved by the prosecution that the gold in q

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1979 Supreme(SC) 512